Ceragon Networks Ltd. (NASDAQ:CRNT) Q3 2019 Earnings Conference Call - Final Transcript
Nov 04, 2019 • 09:00 am ET
Thank you. [Operator Instructions] Our first question is from the line of Alex Henderson with Needham. Please go ahead.
Thanks for taking my question. So I guess there's a couple of things that jump off the page at me. The first is, you've seen a delay in the timing of the India orders out into the first half, but at the same rate, you're saying that you expect the first half to be below the $75 million run rate. Can you talk a little bit about what the positives and negatives are that are offsetting the realization of that? Is it -- that you're expecting a lower India in aggregate excluding that -- the timing of that large order or how do we think about that?
If you look at the average run rates over the last few quarters and we planning -- plugging in a little bit of seasonality in some of the other regions into Q1, we do believe that the first half will look flat. You can look at that even on this quarter, that's Q3, which was in that range and we still delivered to India the large sum in Q3. And between the seasonalities of the different regions, that's why we believe that to ramp up above the $70 million to $75 million range, we'll be at the higher ends of that range is -- towards the next of the -- half of the year when we'll start to see additional revenue from 5G design wins we have been doing. So, the overall run rate and with the regional mix fluctuations still stays at the same number. I'm not adding the order of India on top of something. It's part of the run rate business.
Okay. And with respect to the mix, it sounds like India is a little stronger in the first half, maybe a little weaker in the back half because of the timing of that is -- that can result in 1H gross margins a little bit below the average for the full year in 2020?
You'll see similar behavior to this year I think where -- when India is a little bit stronger. The margins fall a little bit, and then when it become weaker and you can see that in the pipeline that we had in Q1, Q2 and Q3 of this year as well.
I see. Okay. The Company made a decision a number of years back to play fairly hard on gross margins and play fairly hard on the timing of receivables. The DSOs jumping back up, so obviously not consistent with that strategic imperative. Can you talk about where you expect the DSOs to go, to what extent, how fast will those come back into a more reasonable range and obviously, that's a pressure point.
I will answer for the question. So what we actually see, recently, is the shift with customer to more extended payment terms. It's actually also due to the fact that we see lower